The Peer to Peer workshops continue to increase in popularity at Professional Forums, as roundtable discussions evolve from introductions to issues.

On Monday afternoon at the IAMC Professional Forum in Williamsburg, a full complement of 25 tables representing all three parts of IAMC membership participated in compelling and self-directed discussion on topics ranging from logistics facility size and distribution to real estate auctions and service provider choice. Exit strategies, lease negotiations and global consistency in transactions were among the topics addressed. But perhaps the most important was direct exchange of more than pleasantries, as IAMC's members practiced what they preach in opening up to relaxed and cordial conversation about the challenges and triumphs their companies and communities are experiencing.

In the new member informational meeting the day before, longtime members explained how IAMC goes well beyond being a "business card distribution center" and becomes a hub of friendship and camaraderie. Perhaps more than any other session, Peer to Peer demonstrates that spirit and commitment.

Where's the proof? When the combined session had run its course, with sponsors duly thanked and the refreshment stand open, a full third of the tables kept right on talking, making their points without keeping score.

The same held true for the break-out sessions, as corporate active members discussed organizational structure, mergers and acquisitions and job scope while the associate members learned more about structuring high-performance real estate relationships and more about the specific economic development opportunities and challenges in the Greater Williamsburg/James City County area.

Get Some Help benefited from a full dance card of participants and a full list of probing questions.

The next day, in a room set up like British Parliament, the questions and ideas flew fast without being furious as Weyerhaeuser's Rick Little and Quad Graphics' Melissa Bauer moderated Get Some Help. One reporter's notes hit the following highlights:

Embedded leases are part of Sarbanes-Oxley and are becoming a financial issue. One economic developer put it this way: "If someone is holding something for you, it is supposed to get back into the annual report and hit the bottom-line number. It's an obligation that needs to be recognized in a financial way and not just a run of the mill phrase in a lease. Clients have brought it to our attention because we own a great deal of land and buildings. Our attorneys are telling their attorneys what the new rules are if they have somehow an obligation or revenue stream that is not reported somewhere."

Asked what metrics their companies' corporate real estate groups are measured on, only two corporate active members reported being graded on their own profitability, with one noting that "we're incentivized by that, and it's throughout the whole company."

Is there a definitive best practice for benchmarking real estate costs? One corporate active attested, "I was given a challenge to come up with benchmark for costs per square foot. Trying to do it is very tough. We're whittling out minimal expenses, and it's a huge undertaking." Differentiating benchmarks according to different end uses of the real estate presents one challenge. But one member made the point, "If you compare three box plants against three distribution centers against three office buildings in the same business unit, you ought to be able to explain a discrepancy." One company is in the process of applying Six Sigma principles to real estate projects and to vendors.

In extrapolation of value, does your company factor in redevelopment potential? One firm now being acquired is going through that right now. "They're trying to assign a purchase price, and maximize the purchase value. We are considering what can be the highest and best use of the property, and also considering, if it was excess property, whether it can be leased out to others for income." Another firm looks at every single property in its portfolio on a yearly basis and re-evaluates it if necessary. And yet another looks at all questionable assets on a quarterly basis to make sure they're properly valued.

Asked how they fold real estate into the larger strategic vision of the company, several companies reiterated that their directions come from the business units, but noted opportunities for direct input. For the past four years, one firm goes through the strategy of every business unit annually, looking at the next 18 to 24 months. Another participates in the strategic planning of the businesses, analyzing whether there are assets to unload or whether leases are coming up. Though not driving the bus, said the member, "We're in the front seat with the bus driver." Another member noted the constant imperative to drive cost out of operations, aka reducing rooftops or collocating. In yet another corporation, strategy has been added to quarterly reporting: "We add together between the different business units, and make sure we don't send out three different brokers in the same region where three businesses are looking to expand. It's been a very huge success for us internally."

Reflecting on other discussions at the Forum, one Get Some Help participant suggested that developing exit strategies would make for an interesting session topic.

Have outsourcing and off-shoring reduced the demand for industrial and commercial real estate domestically? One attendee said, "The projections show just the opposite. Eventually it has to come back here. Particularly around the ports, projections are off the charts."

"For the last 15 deals in manufacturing and distribution center space, we continued to have problems finding space — in warehousing and distribution, we've seen inventory dramatically reduced," said one corporate member.

Have members found using outsourced providers for construction, maintenance or facility management to be productive? One manufacturer outsourced construction management several years ago, but maintains facility managers at key facilities. He said the outsourcing was not a positive experience initially, but has been cost-effective. Another member said his recent experience in outsourcing construction management had not been favorable, with several "major re-dos" in construction. One materials firm reported that outsourced construction and facility management did not turn out to be less expensive, and in fact might cost more. An industrial supply company noted that outsourced CM had been a positive, as it fit in better with project ebb and flow.

Terry Rees (foreground), GE, and IAMC Chair Scott Reed, Anheuser-Busch, enjoy the give and take at the Get Some Help session in Williamsburg.

Asked how they manage several providers in transaction services, one corporate member said the management is in the relationship — therefore the company does now have a national single-source provider. Another corporation has four units that outsource to one service provider, with the rest going by market. One corporation has three vendors domestically, two in Europe and two in the Asia Pacific, with account managers who manage their brokers. "One thing we did, started out as a lark, and I said it would never work," said a member. "We went to each preferred vendor and said we're not only going to manage you by how you do our projects, but by how much of our product you can sell to them in the future. Any incremental business, we'll give you credit for: We now have vendors with a minimum of $30 million of throughput. We find an amazing amount of pull-through." Finally, one corporate member noted that working with a single provider frequently means the pie is "split too many ways," with the end user frequently pulled into the middle of a fee issue. "Better to go with a particular person in, say, Tokyo, than with a service provider where people are reaching into the pockets of other people," he said.

Is there a crisis in the property insurance market? "We definitely see a lot of it," said one member. "I never used to spend any time with the Factory Mutual rep, and now we're on the phone once a week. On some coverages we've seen an increase of 60 percent, which is over $1 per square foot, and the extra cost in a non-performance-driven charge is very difficult to take in."

"Factory Mutual has very strict rules to get the designations required for underwriting," said another member. "It's an incredibly large exposure, and a large waste of time for those of us who have to sit between a contractor and Factory Mutual."

"We're seeing it, but it's not just hurricane, it's standard wind damage," noted another corporate member. "As a consequence, we're going over a facilty by facility assessment of all hazards, which means an increase in the amount of work we have to have done."

Finally, one member noted the gap between landlords and tenants when it comes to payouts from insurance companies: "Landlords are reluctant, in the provision for damage and destruction, to reduce the timeline from 250 days, and we are reluctant to go beyond 150," she said.

What are the effects of Baby Boomer retirements on corporate real estate? One corporate member related that within just his own division, 39 management employees are approaching age 58 ("the magic number") and therefore trying to train the next generation of managers. Another said, "We are thinking about it, but the pressure on cost control does not allow us to bring people in." One member said it was a critical issue for his small department. The solution was reducing his number of days worked per week and his pay, allowing the department to hire a new person as he "bridges" out of a full-time schedule.

How do you manage a new boss? Several companies have found rapid turnover in the positions to which corporate real estate reports, often accompanied by scant real estate experience. A show of hands reveals nine corporate members had had a new boss in the past year, and 11 more had welcomed a new boss in the past two years. One firm has just gone through four general counsels. One member suggested reporting based on the manager's style: For example, "directors want options and they want to make the decision." Another said to general laughter, "I invite them out with local politicians, and after a couple of meetings ..."

With regard to whether retention gets enough attention, members of every stripe chimed in. One service provider counseled watching the M&A activity, because those two distribution centers that are 50 miles apart will no longer both be viable. An economic developer suggested "paying to stay" was not the answer, but an effective call and support program for existing companies was the best. Yet another economic developer responded that the best corporate retention solutions were more macro in nature, such as tort reform and infrastructure investment. A major manufacturer responded that it was also important to get to know local plant managers, but also important to kick his facility managers out of their facilities now and then so they would get to know local leaders. At least 10 states have added new retention programs, noted one service provider. Another noted that one firm is ready to pull out 1,300 jobs if something is not done. There was discussion about whether economic developers are truly doing the work required in retention, with one participant saying of retention program visits, "They leave with their check marks, but the next day a plant closes."

However, innovative solutions do exist. One southern economic developer spoke of facing the relocation of a major distribution center to a neighboring state. But through partnering with the company on retraining efforts, the operation stayed and expanded instead. Another corporate member said working with its territories' technical colleges to develop skilled labor was essential.